Subnational entities could continue to suffer financial pressure in 2022: HR Ratings

For next year, sub-national entities could continue to suffer financial pressures, derived largely from current economic factors and where the effects on collection and the increase in the inflation rate stand out, he reported. HR Ratings.

In the framework of the 2022 Economic Outlook webinar, the agency’s Director of Analysis, Felix Boni Brandani, explained that in the last three months it has been generating, both at the federal and local levels, a negative trend in tax collection, which has been caused by the negative impact of the pandemic on employment and economic units.

“Basically, we have seen certain negative trends in terms of tax collection, as we know a good part of the resources that sub-national entities receive come from participations and the participations are largely linked to tax revenues. A good part of 2020 and 2021 has been very successful in increasing collection, however, in the last three months there has been a certain deterioration in the ability to increase collection, that is a possible threat, “he said.

Another point that could affect, he indicated, would be a possible decrease in federal contributionsSince, given the increase in interest rates, the federal government is having other spending priorities.

It could also mean that the federal authorities are focusing their attention on supporting Pemex, they are implementing a rescue program that would be affecting the ability to spend in other areas, where the states and municipalities enter.

“The federal government faces a couple of challenges. First, the increase in interest rates, the financial cost, which has pressured current spending, including contributions for states and municipalities. Second, the fact that the federal government, like part of his program to rescue Pemex“It will also affect the ability to spend in other areas,” said the director of Analysis of the rating agency.

The specialist stressed that another point would be added, that access to financing from private banks would be complicating.

It is a somewhat complicated situation, the financing of the commercial banks to the states and municipalities has been decreasing ”, said Boni Brandani.

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